Annual Report 2014 · Bramhope Group Holdings Ltd.) Expanding Business Activities in Japan (JOI’X...

textile Company Pursuing value-added propositions for our customers is a reason for our competitiveness. We will continue to strengthen strategic alliances with leading partners and create new businesses.

Business portfolio

overview

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Brand: about 40%

Total Assets: about 7% Operating Cash Flows: about 7%

non-clothing use: about 20%

Apparel: about 40%

net Income: about 10%


Composition of Company Earnings by Consolidated Segment (image)

Percentage of Total Consolidated Assets and Total Net Income Attributable to ITOCHU (image)

Percentage of Total Consolidated Operating Cash Flows and Total Net Income Attributable to ITOCHU (image)

Overseas: about 30%

Company Percentage of Earnings from Overseas Businesses (image)

about 20%

Percentage Contribution of Non-consolidated Trade Earnings to Net Income Attributable to ITOCHU (image)

Global Development of Overseas Brands

March 31, 2014

Consolidated: 20,191 (20%)non-consolidated:

422 (10%)

Percentage of Total Employees

Japan: 23 (17%)Overseas:

17 (8%)

Percentage of Total Number of Subsidiaries and Affi liated Companies

March 31, 2014

Global Development of Global Development of Global Development of Global Development of Global Development of Global Development of Global Development of Global Development of Global Development of Global Development of Global Development of Global Development of Global Development of Global Development of Global Development of Global Development of Global Development of Global Development of Global Development of Global Development of Global Development of

China MarketEnhancing strategic partnerships with

leading local companies(Shanshan Group Co., Ltd. / Shandong Ruyi Science

& Technology Group Co., Ltd.)Expanding sales activities in China

(ITOCHU TEXTILE (CHINA) CO., LTD.)

Business Development in AsiaEmergence of Consumer

Markets in the RegionExpansion of sourcing platform

in ASEAN regionEntry to the next emerging markets

following China(ITOCHU Textile Prominent (ASIA) Ltd.,

Bramhope Group Holdings Ltd.)

Expanding BusinessActivities in Japan(JOI’X CORPORATION)

(CONVERSE FOOTWEAR CO., LTD.)(LEILIAN CO., LTD.)

(JAVA HOLDINGS CO., LTD.)(SANKEI CO., LTD.)

NEW YORK SANTA MONICA LAS VEGAS GARDEN STATE PLAZA LESPORTSAC.COM NEW YORK SANTA MONICA LAS VEGAS GARDEN STATE PLAZA LESPORTSAC.COM

46 ITOCHU CORPORATIOn AnnuAl RepoRt 2014

In fiscal 2015, the second year of “Brand-new Deal 2014,”

we will cultivate high-value-added business in the Japanese

market. At the same time, we will work to expand business

with global customers by reinforcing production systems that

link China and other parts of Asia, as well as stepping up

overseas brand development in Asia and other regions. As a

result, we will integrate units, domestic and overseas operat-

ing companies, and overseas subsidiaries on hybrid initia-

tives that organically link multiple functions, such as raw

materials, planned production, branding, and distribution,

thereby promoting downstream strategies globally.

Furthermore, through moves such as the sponsorship agree-

ment we have concluded with the Edwin Group, we will

make an aggressive approach to accumulate new superior

assets that will enable us to expand our business portfolio

both domestically and internationally. Through steady prog-

ress on these measures, we will reinforce our industry pres-

ence as a leading customer-oriented marketing company

and firm up the Textile Company’s earnings platform, playing

a key role in the consumer-related sector.

Trading income decreased by 12.3%, to ¥29.2 billion, due to

the absence of an unordinary gain on reversal of expenses in

the previous fiscal year, although contribution from the

European apparel manufacturing and wholesaling business

we acquired in the previous fiscal year increased transaction

MeSSAGe FRoM tHe DIVISIon CoMpAnY pReSIDent

We will pursue further earnings growth by continuously acceler-ating our pursuit of downstream strategies and accumulating superior assets.

overview of Fiscal 2014

Focuses for Fiscal 2015

Years ended March 31 10 11 12 13 14

Trading income ¥ 21.2 ¥ 21.6 ¥ 25.2 ¥ 33.3 ¥ 29.2

Equity in earnings of associated companies 8.0 5.9 5.9 12.6 11.7

net income attributable to ITOCHU 22.4 15.3 24.4 31.2 32.5

Total assets 417.4 406.4 433.4 486.8 504.5

ROA (%) 5.8 3.7 5.8 6.8 6.5

Business Results Billions of Yen


ITOCHU Textile Prominent (ASIA) Ltd.* ¥0.5 ¥0.0 ¥ 1.0 ¥1.1 ¥2.0

ITOCHU TEXTILE (CHInA) CO., LTD. 0.9 0.8 1.1 1.3 1.2

JOI’X CORPORATIOn 0.1 0.5 (0.3) 1.3 1.3

* net income from ITOCHU Textile Prominent (ASIA) Ltd. includes net income of equity-method associated companies which were transferred from ITOCHU due to the business restructuring in the former Textile Material & Fabric Division. As a result, profit for the period of the fiscal years ended March 31, 2013 and 2012 includes these companies’ profit.

Net Income (Loss) from Major Group Companies Billions of Yen

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President, Textile Company

Hitoshi okamoto

volume involving textile raw materials for China. net income

attributable to ITOCHU expanded 3.9%, to ¥32.5 billion, as

the positive impact of higher dividends received and a rise in

net gain on investments–net despite a decrease in trading

income.

Organization

Textile Company Apparel Division 1 Apparel Division 2 Brand Marketing Division 1 Brand Marketing Division 2 CFO Planning & Administration Department

47ITOCHU CORPORATIOn AnnuAl RepoRt 2014

Rapport and Reach

the textile Company has inherited

the original business of ItoCHu.

Our scope of business covers the entire area of lifestyle cate-

gories, and, as a customer-oriented marketing company, we

have developed businesses that cover the entire textile

industries, from raw materials / fabrics to garment manufac-

turing, brands, and industrial materials.

In Japan, we are continuously improving our high-value-

added production in order to meet consumers’ needs. In the

retail area, we are also focusing on expanding our business

domain, as well as strengthening life & healthcare businesses.

We are also concentrating on brand development in

China, countries in the ASEAn region, the Middle East, and

Latin America, where consumer markets are expected to

expand. Furthermore, we will enhance our production capa-

bilities across Asia to meet our global customers’ needs.

A marketing company that adopts a social perspective

The Textile Company places a high priority on further improv-

ing the safety of its products and services as well as cus-

tomer satisfaction. It is promoting sustainable manufacturing

that takes full account of labor customs in the supply chain

and the environment in its global setup for production at the

most suitable sites worldwide, which supports the manufac-

turing at the heart of the Textile Company.

CSR Initiatives through Our Business ActivitiesPre Organic Cotton Program

Company value Social value

Create added value by branded textile materials and establishment of traceability

Reduce environmental damage, health hazards, and economic burdens on farmers caused by agrochemicals and chemical fertilizers

Supporting Biodiversity Preservation Initiatives at HUnTInG WORLD


Develop environmentally savvy customers through an environment-conscious brand business

Protect endangered species and support biodiversity preservation activities

The Japanese consumer market, which has continued to

shrink in recent years, has regained its momentum thanks to

an economic recovery. Whereas yen depreciation is weighing

down the textile industry’s import earnings, the improvement

of consumer sentiment is expected to lift overall apparel

demand. Overseas, rising living standards in China and other

Asian countries are increasing their attractiveness as con-

sumer markets. In other emerging countries, too, with resur-

gent economic growth swelling the purchasing power of a

growing middle class, we expect consumption to grow more

diverse and anticipate increasing sales opportunities for

high-value-added products.

A fi rm position in the textiles industry, only Japanese gen-

eral trading company to maintain the textile business as

an independent segment

Operations covering all aspects of textile industries, from

raw materials / fabrics to garment manufacturing, brands,

and industrial materials

A highly effi cient management foundation achieved by

proactively replacing our asset portfolio

For details on CSR activities at the Textile Company, please visit our website

http://www.itochu.co.jp/en/csr/activities/textile/

Per-Capita GDP in Key Emerging Market Regions(Purchasing Power Parity Conversion)

Russia and CIS ASEAn-5* Middle East and north Africa ChinaSource: International Monetary Fund, World Economic Outlook Database, April 2014* Indonesia, Malaysia, the Philippines, Thailand, and Vietnam

Growth opportunities and Risks for the textile Company

Strengths for leveraging opportunities

Medium- to long-term Growth Strategies CSR at the textile Company

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(US$)

2001 2003 2005 2007 2009 2011 2013 20150

4,000

8,000

12,000

16,000


ItoCHu Invests in ASF lIMIteD, an Affi liate of Hong Kong’s Fenix Group Holdings

Rising living standards in the emerging countries of Asia and

the Middle East are prompting greater demand for branded

products. Against this backdrop, we have acquired a 30%

stake in ASF LIMITED, an affi liate of Hong Kong’s Fenix Group

Holdings, a holding company that operates various busi-

nesses including the Italian luxury women’s fashion brand

AnTEPRIMA in various countries, and the retail operations of

brand products in countries such as Hong Kong and China.

By taking advantage of the experience and expertise culti-

vated in the brand business over many years, ITOCHU will

manage to expand the AnTEPRIMA licensing business in

Japan. Also, by combining the pan-Asian network operated

by ITOCHU and ITOCHU Textile Prominent (ASIA) Ltd. with

Fenix’s sales channels and retail know-how in China and other

Asian countries, we will strive to expand existing brands into

Asia. We also look forward to generating various synergies,

such as jointly introducing new brands throughout Asia.

ItoCHu Concludes a Sponsorship Agreement with the edwin Group

ITOCHU has concluded a

sponsorship agreement to

acquire the Edwin Group

(hereinafter “the Group”),

Japan’s largest manufac-

turer and distributor of

jeans, as a subsidiary. The

Group is well known for

manufacturing and distrib-

uting its own EDWIn and

SOMETHInG labels, for

which it enjoys strong

nationwide recognition.

It also holds licensing

rights to the leading

north American jeans

brands Lee and Wrangler. The Group has established a strong

position as the market leader by building a unique business

model which integrates the entire process from planning and

manufacturing to distribution, backed by advanced product

development capabilities. Through its long-term business

relationships, ITOCHU has contributed to the Group’s devel-

opment in various ways, leading up to this agreement. While

respecting the Group’s traditions and distinctiveness, we

will work to reinforce its mainstay jeans business, further

strengthen relationships with existing customers, and culti-

vate new markets including overseas. As a result, we intend

to enhance the Group’s corporate value and expand

its business.

Medium- to Long-Term Growth Strategies

Raw materials / Fabrics

Garment manufacturing

Brand

Industrial materials

Textile material development

OEM (original equip-ment manufacturing)

License

Medical supplies

Imports

Industrial textiles

Pursuing high added value

ODM (original design manufacturing)

Trademark rights acquisitions,

M&As

Overseas development

Commercialization

Electronics

Promote a hybrid strategy that combines multiple functions by pursuing value-added propositions and taking the initiative

MarketingMarketingMarketing

companycompanycompany

Rapport and Reach

Priority strategies

Investment strategies

Entry into growing areas Value-added proposition + Pursuit of synergies

Retail strategies

Introducing high-value-added textile materials Expanding sales channels Expanding the business area to the entire area oflifestyle categories

Overseas strategies

Europe, the United States, and China and other emerging countries Overseas brand development Expanding manufacturing networks

Action 01

Action 02

Initiatives to Implement our Growth Strategies

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“EDWIn”

“AnTEPRIMA”


South Tyne & Wear (PFI)Cornwall (PFI)

Kiev Metro (Subway)

Bristol Water (Water utility)

İzumit Bay Bridge (EPC)

Sarulla Geothermal IPP

MULTIQUIP(Distributor)

Shepherds FlatWind Power Plant (IPP)

VEHICLES MIDDLE EAST(Distributor)

Komatsu Southern Africa(Distributor)

SUZUKI Finance Indonesia (Auto retail finance)Hexindo (Distributor)

SUZUKI MOTOR RUS(Distributor)

ITOCHU Automobile America(Distributor)

SICHUAN GANGHONG(Dealer)

Toyo Advanced Technologies(Manufacturer)

Automobile / construction machinery-related trade

Business portfolio

Machinery CompanyWe will work to reinforce earnings by promoting aggressive investments in superior projects and further expanding the trade business.

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overview

Total Assets: about 12%net Income: about 11%

Company Composition by Consolidated Segment (image)



Operating Cash Flows: about 13%

March 31, 2014 March 31, 2014


444 (10%)

Percentage of Total Employees Percentage of Total Number of Subsidiaries and Affi liated Companies

Japan: 25 (18%)Overseas: 43 (20%)

Overseas: about 40%


Automobile, ConstructionMachinery & IndustrialSystemsTotal Assets (outside): about 60%net Income (inside): about 60%

Plant Project, Marine & AerospaceTotal Assets (outside): about 40%net Income (inside): about 40%


Investment Project

Plant Project, Marine & Aerospace

Automobile, Construction Machinery & Industrial Systems


During fiscal 2014, the first year of “Brand-new Deal 2014,”

earnings growth from existing businesses contributed sub-

stantially to company performance, with gross trading profit

and income reaching historic highs for the third consecutive

fiscal year. As part of the non-resource sector of the leading

general trading company, we aim to be a robust company

that contributes solidly to performance in the machinery-

related segment.

The Machinery Company’s wide-ranging business areas

include plant projects, marine, aerospace, automobiles, con-

struction machinery, industrial machinery, and healthcare and

constituting a structure including numerous operating com-

panies. Each of our organizations and individuals aims to

advance from the present, taking progress to the next level.

By business area, we are concentrating our management

resources, expanding our superior assets in independent

power producer (IPP), water-related, and environment-

related businesses; pursuing strategic involvement in fields

where demand is growing, such as the infrastructure,

marine, and aerospace businesses; boosting trade in the

automobile, construction machinery, and industrial machin-

ery businesses, which have broad value chains; and step-

ping up healthcare-related businesses in Japan and other

Asian markets. Through these initiatives, we are rapidly

building a stable earnings platform and targeting net income

attributable to ITOCHU of ¥50.0 billion (IFRS).

Despite the absence of unordinary gain on reversal of allow-

ance for doubtful receivables in the previous fiscal year,

the Machinery Company posted an 18.9% rise in trading

income, to ¥22.9 billion, thanks to increased automobile,

construction machinery, and plant-related transactions.

net income attributable to ITOCHU surged 35.1%, to ¥43.4

billion. In addition to the rise in trading income, the company

benefited from increases in dividends received, net gain on

investments, and equity in earnings of associated

companies.


We aim to achieve growth by taking progress to the next level.




Trading income (loss) ¥ (2.2) ¥ 8.9 ¥ 15.2 ¥ 19.3 ¥ 22.9



Total assets 694.4 672.4 800.1 890.9 953.8

ROA (%) 0.5 1.5 3.1 3.8 4.7



JAPAn AEROSPACE CORPORATIOn ¥0.2 ¥0.6 ¥ 0.6 ¥0.7 ¥1.0

JAMCO Corporation 0.0 0.0 (1.2) 0.6 0.9

ITOCHU COnSTRUCTIOn MACHInERY CO., LTD. 0.5 0.6 0.6 0.9 1.3

Century Tokyo Leasing Corporation 6.8 4.0 6.2 6.2 8.4

Century Medical, Inc. 0.6 0.8 0.9 1.0 1.1


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takao Shiomi

Organization

Machinery Company Plant Project, Marine & Aerospace Division Automobile, Construction Machinery

& Industrial Systems Division CFO Planning & Administration Department


Infrastructure Industry: Demand for infrastructure invest-

ment and maintenance is expanding on a global basis, with

infrastructure projects growing rapidly in emerging countries,

particularly in the ASEAn region. From a trading company

standpoint, infrastructure investment opportunities are

increasing in industrialized countries, as well, as the operat-

ing environment changes due to factors such as the shale

gas revolution, environmental considerations, and the privati-

zation of public-sector businesses. Putting to work our

extensive experience in infrastructure investment, we will

continue to develop superior projects, while minimizing risks

in regions where various systems remain to be put in place.

Shipping (LNG Carriers): From 2014, demand for LnG carri-

ers is expected to rise sharply, centering on U.S. shale gas

projects. As the scale of investment in LnG carriers is typically

large, we will collaborate with partners in Japan and overseas

to uncover superior projects, building up assets that will gen-

erate stable earnings and profi ts over the long term.

Automobile Industry: In addition to growth in emerging mar-

kets, the overall automobile market is expanding thanks to

recovery in the European and Chinese markets. The outlook

for the Japanese automobile industry is also improving, bene-

fi ting from the correction to yen appreciation since 2013. The

industry’s structure is changing as a result of environmental

regulation and mounting competition in electric vehicles and

other areas of new technology. Amid these conditions, we

plan to enhance a fi rm industry position by steadily adding

value through the long automobile business value chain.

In IPP, water supply, environmental, energy, and other infra-

structure businesses, we will give consideration to environ-

mental impact. At the same time, we will strive to promote a

balance between the accumulation of superior assets in

industrialized countries and highly profi table development

projects in developing countries. We will endeavor to expand

trade in line with improvements in the external environment

such as foreign exchange in fi elds of conventional strength,

including marine, aerospace, automobile, construction

machinery, and industrial machinery. We will also strive to

generate stable earnings through stringently selected invest-

ments in peripheral sectors. Furthermore, we will promote

the construction of a medical value chain to meet anticipated

future growth in this sector, aiming to further enhance busi-

ness investment and trade in Japan and other parts of Asia.

Through these approaches, we will maximize earnings from

existing investments and promote the accumulation of supe-

rior assets and ongoing, large-scale asset replacement,

maximizing earnings as we also conduct trade in related and

ancillary fi elds.

Delivering enrichment to the next generation

Through its business, which provides wide-ranging support

for social infrastructure, the Machinery Company aspires for

the advancement of communities by providing a more affl u-

ent lifestyle. We strive for contribution to the resolution of

global problems such as climate change through environ-

ment preservation businesses and the building of a healthy

society through healthcare businesses.

CSR Initiatives through Our Business ActivitiesMerseyside Waste Management and Power Generation Project

in the United Kingdom


Building the foundation for waste man-agement and power generation business in the United Kingdom and other regions

Contribution to waste reduction of approximately 92%, lowering annual CO2 by approximately 130,000 tons

Water Utility Business in the Spanish Canary Islands


Acquire presence in overseas water utility business by participating in project following the investment in the United Kingdom and enhancement of a stable earnings platform

Provide high-quality, sustainable, and effi cient water service

Solid, long-term relationships with excellent partners in

various industries

In infrastructure-related business, the capacity to develop

superior projects through global human resource and

information networks

In the broad-based automobile industry, the ability to

create and promote industrywide value chains

For details on CSR activities at the Machinery Company, please visit our website.

http://www.itochu.co.jp/en/csr/activities/machinery/

Growth opportunities and Risks for the Machinery Company


Medium- to long-term Growth Strategies CSR at the Machinery Company

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ItoCHu Acquires Additional Stake in YAnASe & Co., ltD.

In December 2013, ITOCHU acquired 6,484,000 shares of

common stock in YAnASE & CO., LTD., through a tender offer

from nippon Tochi-Tatemono Co., Ltd., amounting to a

13.72% share of voting rights in YAnASE and increasing

ITOCHU’s ownership of the company to 39.44%. With more

than 200 outlets throughout Japan, YAnASE is the country’s

leading car dealer in terms of units sold. This investment aims

to ensure that the company continues to develop its opera-

tions further and build a highly profitable operation by promot-

ing the consolidated operation of its three pillars: new car

sales, used car sales, and after-sales services; reinforcing its

management of the value chain; and making management

improvements that will lead to further growth. ITOCHU will

continue to support YAnASE’s management on both the capi-

tal and operational fronts. We will also make use chiefly of

ITOCHU Group networks to expand the company’s overseas

business and contribute to increases in its corporate value.

Initiatives in the Water and environment Sectors

ITOCHU entered the water supply business in 2012 with the

acquisition of a 20% stake in the Bristol Water Group, which pro-

vides water treatment services to the city of Bristol, in southwest

England, and its surrounding area. Following on in this vein, in

February 2014 ITOCHU reached an agreement to acquire 33.4%

of the shares in CAnARAGUA COnCESIOnES S.A., which man-

ages water supply and sewage services in the Spanish Canary

Islands. We acquired this stake from CAnARAGUA S.A., a sub-

sidiary of AGBAR, Spain’s largest private water company. This

agreement marks the first Japanese investment in the Spanish

water sector. In the environment sector, ITOCHU is involved in

four energy-from-waste projects in the United Kingdom, including

one under an agreement signed with the Merseyside Recycling

and Waste Authority in December 2013. These businesses

involve the incineration of waste that was previously landfilled,

using the waste heat to generate electricity. This approach

reduces waste volume and contributes to CO2 reductions.

Around the world, we expect a growing number of water-related

businesses to be privatized. Given this trend, combined with

growing demand to reduce environmental impact and generate

green electricity, we plan to leverage the experience and know-

how we are building up in the United Kingdom and Spain to meet

such needs in various

countries. At the same

time, we will step up our

involvement in initiatives

likely to generate stable,

long-term earnings.

YAnASE’s Mercedes-Benz showroomSeawater desalination plant on Grand Canaria

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nIncrease such assets as owned vessels and lease equipment

Ship and aircraft-related trade

Marine & Aircraft

Pharmaceutical production support service

Manufacturing and sales of medical devices

Medical devices trade

Build business portfolio extending from upstream to

downstream and expand trade

Japan / China / Asia businesses / Medical devices (upstream)

Healthcare

Retail financeDealer operations

Parts business

Automobile / construction machinery / industrial machinery / electronic devices-related trade

Automobile, Construction Machinery &

Industrial Systems

Investment in projectsIPP*1, water resources,

environment

EPC*2 projects

Plant Project

Expansion of trade utilizing investment / assets

Allocation of management resources to functional

businesses

Accumulate superior shipping and aerospace assets

Shift to project investment and increase in assets


Action 01 Action 02


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*1 IPP: Independent power producer*2 EPC: Engineering, Procurement, and Construction


Iron ore

Aluminium / Alumina

PGM / Nickel

Zinc / Lead

Coal

Platreef (South Africa) (Under exploration)

MGM (Indonesia)SMM (Indonesia) (Under development)

Drummond (Colombia)Drummond

NAMISA (Brazil)Companhia Siderúrgica Nacional (CSN)

JCU (Canada) (Under exploration)

Ruddock Creek (Canada) (Under exploration)

Uranium

Operator

Ashton (Australia)

Maules Creek (Australia) (Under development)

NCA (Australia)

Rolleston (Australia)

Wandoan (Australia) (Under development)

Oaky Creek (Australia)

Ravensworth North (Australia)

Yandi (Australia)

Mt. Goldsworthy (Australia)

Mt. Newman (Australia)

Jimblebar (Australia)

Worsley (Australia)

BHP Billiton

Glencore XstrataGlencore Xstrata

Business portfolio

Metals & Minerals Company We contribute to the growth of the global economy through the stable supply of mineral resources and of steel and non-ferrous metal products to Japan and other countries.

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overview



Composition of Company Earnings by Consolidated Group Companies (image)




Overseas: about 80%


March 31, 2014 March 31, 2014

Consolidated: 618 (1%)non-consolidated: 209 (5%)

Percentage of Total Employees Percentage of Total Number of Subsidiaries and Affiliated Companies

Japan: 5 (4%)Overseas:

7 (3%)

IMEA (iron ore): about 60%

Others: about 5%

Marubeni-Itochu Steel: about 10%

Brazil Japan Iron Ore: about 15%

IMEA (coal): about 10%


In fiscal 2014, income declined year on year due to falling

prices of metals and mineral resources and the posting of

unordinary tax expenses on Brazilian iron ore operations.

However, we invested in the expansion of our existing inter-

ests in iron ore and coal, acquired interests in the Jimblebar

Iron Ore Mine as part of our Western Australia iron ore oper-

ations, and pursued synergies with trading activities.

Consequently, as in fiscal 2013 we continued to reinforce our

earnings platform.

The outlook for this company’s operating environment

is opaque for the foreseeable future, owing to factors such

as deceleration in the Chinese economy. However, with

support from continued strong economic growth in

emerging countries, demand for metals and mineral

resources is expected to remain firm in the medium to long

term. To contribute to the stable procurement of metals and

mineral resources for Japan and the rest of the world, we

will take a long-term perspective and continue to steadily

expand existing operations. We will also rigorously assess

new investments to select superior projects, and will rein-

force our earnings platform.

Making full use of the distinctive capabilities of a general

trading company, the Metals & Minerals Company will target

the achievement of results that are highly evaluated on both

the supply and demand sides.

Despite falling coal prices, trading income rose 27.6%, to

¥73.2 billion, due to higher iron ore sales volume and the

effects of yen depreciation. Although trading income grew,

the previous fiscal year’s gains on sales of investments were

absent, and equity in earnings of associated companies

decreased reflecting unordinary tax expenses in Brazilian iron

ore operations. Consequently, net income attributable to

ITOCHU dropped by 10.2%, to ¥74.1 billion.


through synergies between accumulated equity interests and trade, we will strive to continue to reinforce our earnings platform.




Trading income ¥ 44.3 ¥113.6 ¥ 101.6 ¥ 57.4 ¥ 73.2



Total assets 536.9 620.9 1,015.7 1,175.2 1,308.2

ROA (%) 8.7 19.2 17.4 7.5 6.0



ITOCHU Metals Corporation ¥ 0.8 ¥ 1.2 ¥ 1.2 ¥ 1.3 ¥ 1.4

ITOCHU Minerals & Energy of Australia Pty Ltd 34.1 80.1 89.3 50.3 58.4

Marubeni-Itochu Steel Inc. 2.7 6.8 12.9 12.8 13.0

Brazil Japan Iron Ore Corporation 4.0 12.9 36.8 10.4 3.8

ITOCHU Coal Americas Inc. — — 2.0 3.5 0.5

Net Income from Major Group Companies Billions of Yen

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President, Metals & Minerals Company

eiichi Yonekura

Organization

Metals & Minerals Company Metals & Mineral Resources Division Coal, nuclear & Solar Division Steel Business Coordination Department CFO Planning & Administration Department


Iron Ore / Coal Price

Iron ore Coking coal (hard coking coal) Thermal coal*1 Source: ITOCHU disclosure documents*2 Figures through fi scal 2010 are benchmark prices for the Japanese market. Figures from

fi scal 2011 onward are prices that ITOCHU considers to be general transaction prices based on market information.

Demand for metals and mineral resources is expected to be

robust over the medium to long term, centering on emerging

countries; we see this situation as a growth opportunity.

nevertheless, in the short term we expect fl uctuations in the

balance between supply and demand—on the demand side

by economic trends in China and Europe, and on the supply

side by progress on new projects and planned expansions

by suppliers. Accordingly, we will need to continue monitor-

ing the balance for the impact of metals and mineral

resource prices.

The Metals & Minerals Company is working to expand its equity

interests in order to secure stable supplies of metals and min-

eral resources underpinning the industrial framework. In addi-

tion, we are working to build a value chain that starts from

equity interests and to create added value in the trade business

by leveraging the ITOCHU Group’s comprehensive strengths.

Furthermore, we are working to secure non-ferrous metals, rare

metals, rare earth metals, and other natural resources that have

become increasingly diffi cult to procure in recent years. In

response to growing international concern with environmental

problems, we are also actively involved in such areas as solar

power and biomass fuels-related business.

Sustainable development and stable supply of metals

& mineral resources

As it promotes the sustainable use of metals & mineral

resources for their stable supply, ITOCHU is working with

business partners to tighten arrangements for concerning the

environment, harmony with communities, and a safe labor

environment on development sites. We are also committed to

effective use of resources, pursuit of renewable energy proj-

ects, and the building of recycling-oriented societies.

CSR Initiatives through Our Business ActivitiesAcquisition of new Interests in the Jimblebar Iron Ore Mine


Further expand supply capacity of Western Australia iron ore operations

Stable supply to Asia, where demand is expected to increase in the medium- to long-term

Start of Operations at One of Africa’s Largest Photovoltaic Power Generation Systems


Secure position as a system integrator of solar power generation system in Africa and enhance solid earnings platform in the photovoltaic power generation business

Help to support economic growth and realize a leading-edge, clean-energy society

Solid, long-term relationships with strong partners and

top class of equity iron ore/coal holders among general

trading companies

Value-added creativities in the trading business that lever-

age the comprehensive power of the ITOCHU Group

Steel products business centering on Marubeni-Itochu

Steel Inc., in which we hold a 50% stake

For details on CSR activities at the Metals & Minerals Company, please visit our website.

http://www.itochu.co.jp/en/csr/activities/metal/

Growth opportunities and Risks for the Metals & Minerals Company


Medium- to long-term Growth Strategies CSR at the Metals & Minerals Company

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FY08 FY09 FY10 FY11 FY12 FY13 FY140

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Trade in raw materials and fuels

Steel mills / power utilities / manufacturers, etc.

Manufacturers / consumers

Trade in products

Coal Uranium Biomass fuelsSolar

Business development in solar power and other areas

Increase in equity interests

Securing limited resources

Coal, nuclear & Solar Division

Iron orenon-

ferrous metals

Rare metals

Rare earth metals

Expansion of metals resource lineupIncrease in equity interests

Securing limited resources

Metals & Mineral Resources Division

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Commencement of operations in South Africa of one of Africa’s largest photovoltaic power Generation Systems

Scatec Solar (norway), in which ITOCHU owns a 37.5% stake,

has concluded an agreement with the South African state-

owned power utility Eskom, to sell power for a period of 20

years. The company was selected by the South African energy

authority in bidding for Phase I and Phase II solar (photovol-

taic) power generation business with a capacity that will reach

190 MW. Construction on Phase I of the project, supplying 75

MW, began in September 2012 and was completed in

September 2013. An opening ceremony was held in

november 2013, and operations commenced. The South

African government has set a target of increasing the country’s

total generation capacity to 85 GW by 2030, and they aim to

generate some 20% from renewable energies. The current

project is part of the plan to achieve this objective.

Through this business, Scatec Solar will establish its repu-

tation in Africa as a photovoltaic power generation system

integrator capable of development, construction, and owner-

ship of large-scale photovoltaic power plants.

Acquisition of new Interests at the Jimblebar Iron ore Mine

ITOCHU has acquired interests in BHP Iron Ore (Jimblebar)

Pty. Ltd., which is developing the Jimblebar Iron Ore Mine in

Western Australia as part of the iron ore business of leading

mining company BHP Billiton (Australia and the United

Kingdom).

The Jimblebar Iron Ore Mine has abundant deposits, and

will be a large-scale open pit mine that produces high-quality

competitive ore. ITOCHU and BHP Billiton together operate

three iron ore mines in Western Australia. The iron ore exca-

vated from the Jimblebar mine will be transported through the

rail and port facilities owned by these companies. Through this

transaction, ITOCHU aims to increase iron ore supply capacity

through Western Australia iron ore operations, in response to

the expected increase in demand for iron ore over the medium

to long term, particularly from Asia.

The Kalkbult photovoltaic power generation facility, one of the largest in South AfricaOre processing facilities at the Jimblebar Iron Ore Mine (photo provided by BHP Billiton)


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Sakhalin-1 ProjectExxonMobil

Samson InvestmentSamsonNingbo Mitsubishi Chemical

BRUNEI METHANOL

North Sea ProjectsDana Petroleum, etc.

Beijing ITOCHU-Huatang Comprehensive Processing

ACG ProjectBP, etc.

Qalhat LNG Project

Oman LNG Project

ITOCHU ENEX

Ras Laffan LNG ProjectQatar Petroleum, etc.

ITOCHU Plastics

IPC Singapore

ITOCHU CHEMICAL FRONTIER

ITOCHU PLASTICSC.I. KaseiTAKIRON

Agromate

Operator

Oil & gas project

Oil & gas trading

Petroleum products / LPG wholesale and retail

Chemical production

Chemical trading

Business portfolio

energy & Chemicals CompanyWe will create new value through our value chain in the areas of petroleum, gas, and chemicals.

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Company Composition by Consolidated Segment (image)* Excludes impact of extraordinary loss related to U.S. oil and gas development business




March 31, 2014 March 31, 2014


334 (8%)


Japan: 23 (17%)Overseas: 32 (15%)

Overseas: about 40%

Company Percentage of Earnings from Overseas Businesses (image)* Excludes impact of extraordinary loss related to

U.S. oil and gas development business

EnergyTotal Assets (outside): about 60%net Income (inside): about 60%

Chemicals Total Assets (outside): about 40%net Income (inside): about 40%


In fiscal 2014, in the energy area, additional production com-

menced in the Azeri-Chirag-Gunashli (ACG) Oil Fields, which

is called the Chirag Oil Project and had been under develop-

ment. In the chemicals area, we succeeded in becoming the

world’s first entity to produce lithium carbonate from geo-

thermal brine in the United States. We believe that we are

making steady progress on these projects, which are

included as initiatives spelled out in our medium- to long-

term growth strategies.

In fiscal 2015, we aim to reach our management targets

through increased earnings on existing businesses and

trade. At the same time, we will endeavor to reinforce our

management foundation by investing in superior projects,

expanding our base of operations for the future. To this end,

we will reinforce our generation of operating cash flows and

make a lean management by maintaining thorough aware-

ness of asset efficiency. By restructuring our operations, we

will curtail costs, bolster management efficiency, and boost

earnings from large-scale projects that are currently in opera-

tion. At the same time, we will foster synergies between the

energy and chemicals areas. Furthermore, based on our

medium- to long-term growth strategies, we will expand

existing businesses and work with partners with whom we

have complementary relationships to accumulate superior

assets. The Energy & Chemicals Company’s operations span

the resource and non-resource sectors. By pursuing strate-

gies in each sector, we will execute the strategies we have

drawn up in each area by making full use of the distinctive

capabilities of a general trading company, such as securing

energy resources for Japan and creating added value

throughout the value chain in the petroleum, gas, and chemi-

cals areas. Thus, we will contribute to the development of

Japan, other parts of Asia, and the rest of the world.

The Energy & Chemicals Company generated trading income

of ¥57.5 billion, up 7.0% from the previous fiscal year, owing to

higher transaction volume and improved profitability of energy

trading transactions, and a higher chemicals transaction


We aim to increase earnings through synergy among divisions, and to establish a stable management foundation for the future.




Trading income ¥ 33.2 ¥ 42.1 ¥ 47.0 ¥ 53.7 ¥ 57.5

Equity in earnings (losses) of associated companies 2.0 1.7 2.4 (28.3) (32.9)


Total assets 1,107.7 1,085.8 1,287.1 1,335.2 1,283.7

ROA (%) 3.8 1.2 3.2 1.8 1.3



ITOCHU Oil Exploration (Azerbaijan) Inc. ¥7.5 ¥10.7 ¥13.0 ¥ 13.1 ¥ 15.7

ITOCHU PETROLEUM CO., (SInGAPORE) PTE. LTD. 0.8 0.0 (0.2) 0.8 4.3

JD Rockies Resources Limited — (0.1) (0.1) (31.2) (32.5)

ITOCHU CHEMICAL FROnTIER Corporation 1.9 2.0 2.9 3.0 3.2

ITOCHU PLASTICS InC. 1.9 2.2 1.9 2.2 3.0


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Yuji Fukuda

volume, as well as to the effect of yen depreciation. Although

trading income rose, the gain on investments–net declined and

equity in earnings of associated companies worsened, reducing

net income attributable to ITOCHU 27.7%, to ¥16.7 billion.

Organization

Energy & Chemicals Company Energy Division no. 1 Energy Division no. 2 Chemicals Division CFO Planning & Administration Department


Energy Area: Economic growth in emerging countries con-

tinues to drive up demand for oil. Given this situation, com-

bined with geopolitical uncertainties in the Middle East,

Africa, and Russia, we expect crude oil prices to remain fi rm

from now on. Global demand for natural gas is also rising,

and new oil and gas resource development continues apace.

Furthermore, increased north American shale oil and gas

production is altering the supply / demand structure, and

new LnG and LPG exports from north America are

expected. Against this backdrop, we believe that business

opportunities for oil and gas resource development and

trade will grow. At the same time, we need to remain vigilant

toward the global supply / demand balance for oil and gas,

geopolitical risks in the Middle East and other areas, and the

Energy Area: With regard to trading, we will continue to

expand the traditional fl ow of business—importing and

wholesaling products to countries in Asia. Meanwhile, we will

take advantage of the opportunity presented by growing

unconventional crude oil and gas production in north

America to encourage the new fl ow of trade from north

America to Asia.

With regard to oil resource development, we plan to

expand existing projects and participate in promising new

projects while minimizing risks, leveraging our expertise and

experience to expand our business in this area.

Chemicals Area: Based on worldwide trading operations in

the areas of organic chemicals, plastics, and fertilizer and

other inorganic chemicals, the division will advance projects

in upstream areas to secure competitive raw materials. In

addition, in downstream areas the division will take steps to

expand its business and bolster its supply chains, especially

in the retail area, including pharmaceuticals, plastics pro-

cessing, and electronic materials.

pursuit of stable supply of diversifying energy

resources and materials

The Energy & Chemicals Company aspires for the stable

supply of energy and materials at the foundation of modern

living, and is tightening measures for concerning the environ-

ment, harmony with communities, and safety in product han-

dling throughout its wide-ranging value chains for oil, gas,

and chemicals. The Company is also committed to the build-

ing of an enriched society through the development of diverse

energy resources and the environment preservation business.

CSR Initiatives through Our Business ActivitiesUndertaking a Development Project in the U.K. north Sea in a Bid to

Ensure a Stable Resource Supply


Expand operations by applying and making use of our technological and commercial expertise

Secure stable crude oil resources

Entering Business Related to Lithium-Ion Batteries


Apply our Group network to create a value chain spanning upstream to down-stream operations

Contribute to the fi eld of clean energy, for which demand is expected to grow

energy Area

Solid customer base in trade in Asia and the Middle East

Expertise based on extensive experience and

performance on existing projects involving oil resource

and LnG development

Chemicals Area

Competitive commodity procurement capabilities and

sales bases at locations throughout the world

Business development with partners that leverages trade

relationships

For details on CSR activities at the Energy & Chemicals Company, please visit our website.

http://www.itochu.co.jp/en/csr/activities/chemical/

Growth opportunities and Risks for the energy & Chemicals Company


Medium- to long-term Growth Strategies CSR at the energy & Chemicals Company

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impact on oil and gas prices of monetary policies in the

United States and other countries.

Chemicals Area: We expect demand to remain fi rm, cen-

tered on this division’s major markets of China, the ASEAn

region, and north and Latin America. We also envision

expanded trade opportunities as new additions to large-

scale ethylene plants in north America, the Middle East, and

Asia prompt changes in the medium-term supply and

demand structure for commodity chemicals centered on

north America and Asia. In line with this forecast, we see

new business opportunities for trade and business develop-

ment. Meanwhile, we recognize the need to continue moni-

toring the market prices of chemicals, as well as supply and

demand trends.


Success in the united States with the World’s First production of lithium Carbonate from Geothermal Brine

Lithium carbonate and lithium hydroxide are core raw materi-

als for producing cathode materials, the main components of

lithium-ion batteries, and they are also used for producing

electrolyte salts necessary to form electrolyte solution in the

batteries. Demand for these lithium chemicals is expected to

grow for use in electric vehicles and other products.

In June 2010, ITOCHU invested in Simbol Inc., which

has a demonstration plant located near the Salton Sea in

California. At this plant, the company has succeeded in pro-

ducing lithium carbonate (with a purity in excess of 99.9%)

using geothermal brine—a world’s fi rst.

Today, approximately 70% of the world’s lithium carbonate

and other lithium chemicals are produced through a solar

evaporation process, using brine from salt lakes in South

America. The unique production technology developed by

Simbol uses high-temperature geothermal brine, thereby limit-

ing the emission of carbon dioxide and reducing energy costs

without being affected by changes in weather conditions, as it

does not involve solar evaporation.

Going forward, after technology verifi cation at the demon-

stration plant, we expect to begin commercial production with

the aim of providing

a stable supply of

lithium resources.

Azeri-Chirag-Gunashli oil Fields start addi-tional production in the Caspian Sea, Azerbaijan (Chirag oil project)

Through a subsidiary which has a 4.3% participating interest,

ITOCHU has commenced additional oil production from both

the existing Chirag oil fi eld and the deepwater portion of the

Gunashli oil fi eld, including the shallow parts in January 2014,

in addition to the current oil production from the Azeri-Chirag-

Gunashli (ACG) Oil Fields. (Operator is BP.) The additional oil

development is called the Chirag Oil Project (COP), and

started in 2010. The additional oil fi eld production that com-

menced in January was from a sixth drilling platform. The

crude oil produced at this fi eld in the Caspian Sea will be

shipped via the 1,768-kilometer BTC Pipeline, in which

ITOCHU is an investor, to a Turkish port for export.

With a total investment of around US$6.0 billion, this proj-

ect involves erecting a production platform capable of produc-

ing crude oil at a rate of up to 183,000 barrels per day, with

additional oil production conducted using pre-drilled wells.

ITOCHU plans to continue taking part in development aimed

at raising the value of this fi eld.

Pharmaceuticals (China / generics)

General merchandise (plastic products / cosmetics)

C.I. Kasei

TAKIROn

LiB materials (cathode materials / anode materials)

LEDs / Solar cells

Methanol project

BRUnEI METHAnOL

Fertilizer project

Agromate Holdings

Lithium resource project

Crude oil and natural gas upstream

ACG, Sakhalin-1, and others

LnG upstream RasGas, Oman LnG, Qalhat LnG

Petroleum products ITOCHU EnEX

LPG Isla Petroleum & Gas

Creating new value through our extensive value chainSynergies among natural resource development, crude oil trading, and upstream chemicals projects

Synergies among LPG, naphtha, and chemicals trading

Global development of chemical product tradeOrganic chemicals Plastics Inorganic chemicals

Developing business in retail area

Strengthening and expanding plastics

processing business

Expanding activities in electronic

materials area

Secure competitive materials through participation in projects with superior raw materials or locations

Increase in equity interests

Bolstering ITOCHU Group’s wholesale and retail networks

Global development of energy tradeCrude oil Petroleum products LnG

IPC (Singapore / Europe / USA)


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Production platform for the Chirag Oil Project (photo provided by AIOC) Product image (lithium compound)

ITOCHU CHEMICAL FROnTIER ITOCHU PLASTICS


Business portfolio

Food CompanyWe will accelerate the implementation of the global SIS (Strategic Integrated System (vertical inte-gration from upstream area to downstream area)) strategy and aim to be a Japan- and Asia-based leading global food company.

* SIS strategy: A strategy for supply chain optimization through vertical integration, from upstream procurement of food resources to mid-stream product processing and marketing and distribution and through to downstream retail businesses.

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Percentage of Total Consolidated Total Assets and Total Net Income Attributable to ITOCHU (image)



March 31, 2014 March 31, 2014


375 (9%)

Percentage of Total Employees Percentage of Total Number of Subsidiaries and Affi liated Companies

Japan: 18 (13%)Overseas: 25 (12%)

Overseas: about 30% about 15%


Percentage Contribution of Non-consolidated Trade Earnings to Net Income Attributable to ITOCHU (image)Provisions

Total Assets (outside): about 20%net Income (inside): about 20%

Fresh FoodTotal Assets (outside): about 20%net Income (inside): about 30%

China BusinessTotal Assets (outside): about 10%net Income (inside): about 10%

Food Products Marketing & DistributionTotal Assets (outside): about 50%net Income (inside): about 40%

Raw materials / materials

Production

Retail Retail

Raw materials /materials /production

Raw materials /materials /production

Production

Production

Wholesale

WholesaleRetail

Retail

China SIS Domestic SIS

Thailand SIS Philippines SIS

Indonesia

COFCO ITOCHU Feed Mills

Rustan

Dole Dole

Burra Foods (Milk powder)

Raw material supply bases

Raw material supply bases

AnEKA COFFEE

AnEKA TUnA*

Calbee-Wings Food

MEGMILK SnOW BRAnD

Longda Foodstuff, etc.

Zhongxin BIC

FamilyMart

ITOCHU Sugar

Central Retail

PhilippineFamilyMart

Wholesale

* Subsidiary under IFRS

WInGS

Fuji Oil

EGT (Wheat, corn, soybeans, DDGS)

HYLIFE (pork)

Oilseeds (Sunflower oil, safflower oil)

QTI (High-value-added grain / ingredients for animal feed)

CGB (Corn, soybeans, wheat, milo)

CAFEBRAS (Coffee beans)

UnEX GUATEMALA (Coffee beans)

Prima Meat Packers

ITOCHU-SHOKUHIn

nIPPOn ACCESS

FamilyMart

Ting Hsin

BXE

Subsidiaries

Associated companies

Joint ventures

Strategic partners

Sales network in the fresh produce business

in Asia

Sales network in the global packaged food

business


We are positioning fiscal 2015, the last year of “Brand-new

Deal 2014,” as a year for storing up our energy in prepara-

tion to make a major leap forward in the future. First, we will

concentrate on bolstering the profitability of existing busi-

ness, such as the Dole business we acquired in 2013. We

will push through decisively with radical measures targeting

unprofitable businesses, as we aim toward a more stable

and robust earnings structure. The Japanese market, the

fundamental source of this company’s earnings, is growing

increasingly oligopolistic and fiercely competitive. To survive

in this environment, we will maximize the human resources,

know-how, and experience possessed by ITOCHU and its

operating companies in Japan as we reinforce our presence

in various fields. At the same time, we will further accelerate

the deployment of the global SIS—our company’s growth

strategy. To achieve this, we will make the strategic invest-

ments necessary to achieve our aim of evolving from a com-

pany with operations in Japan and other parts of Asia to a

leading company in the global food industry. We will continue

working to build a framework for the stable supply of safe,

secure food, and will strive to achieve net income attribut-

able to ITOCHU of ¥58.0 billion (IFRS) in fiscal 2015.

Thanks to the contribution from the Dole business and solid

results from existing operations, the Food Company deliv-

ered trading income of ¥49.3 billion, up 22.1%. Although

equity in earnings of associated companies decreased, a

rise in trading income and higher gain on investments–net

pushed net income attributable to ITOCHU up 25.8% year

on year, to ¥57.5 billion.


We will further increase earnings by accelerating the global SIS strategy from its point of origin in Japan and other parts of Asia.




Trading income ¥ 38.8 ¥ 39.8 ¥ 37.4 ¥ 40.4 ¥ 49.3



Total assets 1,130.7 1,208.7 1,298.4 1,370.2 1,575.2

ROA (%) 2.5 1.9 3.5 3.4 3.9



nIPPOn ACCESS, InC.* ¥4.5 ¥ 6.5 ¥8.6 ¥10.8 ¥11.6

China Foods Investment Corp. 8.7 4.0 2.4 2.7 4.3

Dole International Holdings, Inc. — — — 0.0 7.1

Fuji Oil Co., Ltd. 2.7 2.5 2.3 2.3 2.1

Prima Meat Packers, Ltd. 1.8 (1.4) 2.4 2.4 2.0

FamilyMart Co., Ltd. 4.7 4.0 6.7 9.1 7.3

* On March 1, 2011, nIPPOn ACCESS, InC., merged with the former Family Corporation Inc. and made the former Universal Food Co., Ltd., a consolidated subsidiary. In addition, the company received a business transfer from the former ITOCHU Fresh Corporation Inc. on October 1, 2011. net income attributable to ITOCHU of nIPPOn ACCESS, InC., for the same period of the previous fiscal year ended March 31, 2011 shows the total of these 4 companies.


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Yoshihisa Aoki

Organization

Food Company Provisions Division Fresh Food Division Food Products Marketing & Distribution Division China Business Development Department CFO Planning & Administration Department


Japanese Consumer Prices (Year-on-Year Comparison)

Overall Food Food, Excluding Fresh Foods* Source: Consumer price index (CPI), Statistics Bureau, Ministry of Internal Affairs and

Communications

Due to large-scale monetary easing by the Bank of Japan,

which is a major pillar of the Abenomics doctrine, the

Japanese economy is beginning to pull out of the defl ation

that has plagued the market for some time, with the infl ation

rate hitting a positive 0.9% in fi scal 2014. Price infl ation in

the food category was 0.8%, but only 0.3% if fresh foods are

excluded. Consequently, we believe that prices have still not

risen to an adequate level. Given that signifi cant yen depreci-

ation is also driving up costs, the outlook for higher profi tabil-

ity in the Japanese food products industry is problematic.

However, overseas—particularly in emerging countries in

Asia and other parts of the world—demand continues to rise

as populations increase and incomes rise. Consequently, our

future growth strategies will place increasing importance on

boosting earnings and strengthening profi ts overseas.

In the implementation of the Food Company’s SIS strategy,

we have further accelerated our initiatives, including capital /

business alliances in the retail sector and integration of

Group companies in the distribution and marketing area in

Japan (Step 1). We have also broadened the foundations for

our SIS strategy through its horizontal extension and devel-

opment across the food value chain overseas. We have

achieved this through joint initiatives with strategic partners

in China and other Asian countries such as TInG HSIn

(CAYMAn ISLAnDS) HOLDInG because we recognize that

although the Japanese market is shrinking due to a falling

birthrate and an aging population, demand in fast-growing

emerging countries is rising (Step 2). The acquisition of the

Dole businesses in 2013 will enable the Food Company to

organically combine its existing food value chain with Dole’s

global brand and production and sales network. To acceler-

ate the rollout of our global SIS strategy, we will expand

sales of existing products and develop new products and

businesses that leverage the Dole brand (Step 3).

Construction of value chains for food safety and security

Developing diverse food-related business on a global scale,

the Food Company has made rigorous provisions for assur-

ance of food safety and security as well as concern for the

environment. It endeavors to deliver healthy and rewarding

lifestyles to all people through value chains with high value-

added levels encompassing all processes, from stable

supply and food resources to their processing, manufacture,

wholesaling, and retailing.

CSR Initiatives through Our Business ActivitiesEstablishment and Operation of Procurement network to Ensure the

Stable Supply of Food Resources


Secure customers through the stable provision of food resources to markets in Asia, including Japan and China

Contribute to the safety and security of food in Asian markets, including Japan and China

Efforts to Develop Healthier Foods


Enter the Japanese health food market, where demand is expected to grow further

Provide added value in response to consumer health orientation

Food integration based on the global SIS strategy

Ability to procure a steady supply of foodstuffs from raw

material procurement locations, centered on north

America and Australia

Dole and other Japanese and overseas production and

product processing value chains and food product

development, procurement, and sales functions

In Japan, established top-level position and infrastructure

in food wholesaling and retailing operations, as well as

management expertise in these businesses

For details on CSR activities at the Food Company, please visit our website.

http://www.itochu.co.jp/en/csr/activities/food/

Growth opportunities and Risks for the Food Company


Medium- to long-term Growth Strategies CSR at the Food Company

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enhancing our Dairy and High-Quality powdered Milk Businesses in Australia

Global demand for dairy products is growing on the back of a

rising population and increased income levels. To meet these

needs, in 2009 ITOCHU and ITOCHU Australia invested in

BFA HOLDInGS PTY LTD., the 100% holding company of

Australian dairy manufacturer Burra Foods Pty Ltd, acquiring

45% of the company’s shares. The company is based in the

Gippsland area of Victoria, a foremost dairy region.

Burra Foods steadily expanded its operations following

this investment, beginning production and sales of skim milk

powder and whole milk powder in 2010. To enter rapidly

growing markets in China and other parts of Asia, in May 2014

the company added a facility for making powdered milk for-

mula for infants, which requires even higher levels of control,

and commenced production.

Our involvement with Burra Foods is one example of

efforts to promote the creation of systems for supplying food

resources, based on our SIS

strategy for constructing a

global value chain. We will

continue working to ensure

a stable supply of food and

other high-quality products

to Japan, China, and other

Asian markets, providing

food that is safe and secure.

expansion of Manufacturing plants with a View to Sales expansion in Southeast Asia

A processed cheese manu-

facturing plant for PT

MEGMILK SnOW BRAnD

InDOnESIA (hereinafter

“Snow Brand”), which was

jointly established in May 2012

with Megmilk Snow Brand

Co., Ltd., and PT RODAMAS, has been completed. This was

the fi rst processed cheese plant established in Indonesia as a

Japanese company. Located within the Jababeka Industrial

Estate situated 40 kilometers east of Jakarta, the plant offers

convenient access to a major consumption region. The new

plant will introduce the sophisticated manufacturing and quality

control expertise that Snow Brand has developed with the aim

of delivering “tasty cheese” to customers.

Meanwhile, ITOCHU has joined Kagome Co., Ltd., and

Thailand’s Osotspa Co., Ltd., in the establishment of

OSOTSPA KAGOME CO., LTD. The new company will begin

by focusing on tomato-derived functional beverages, promot-

ing product development and sales to meet demand from

increasingly health-conscious consumers. In addition to

expanding our beverage and food-related production and

sales operations in

Thailand, this move should

increase ITOCHU’s busi-

ness in the growing

Southeast Asian market.

“Tomato Essence,” the first product of OSOTSPA KAGOMEBurra Foods plant

Geographic expansion of the SIS strategy

Extend scope of the SIS strategy

Strengthening the value chain

(vertical integration in each region)

Horizontal extension of

success models

Expanding supply bases for food resources

Expansion of sales of existing products and access to global markets via the Dole brand


MEGMILK SnOW BRAnD InDOnESIA plant

Step 2

Ste

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Step 3

Food resourcesExport grain terminal (north America);

livestock products (Australia and China); seafood (Asia); dairy products (Australia)

Raw materials / materialsFeed, grains, sugar,

fats and oils, livestock products, seafood

Production

Wholesale

Retail

Raw materials / materials Raw materials / materials

Production Production

Wholesale Wholesale

Retail Retail

Domestic SIS

Vertical integration Vertical integration Vertical integration

Horizontal extension of extension of extension of extension of

success

RetailRetailRetail

Raw materials / materialsRaw materials / materialsRaw materials / materialsRaw materials / materialsRaw materials / materialsRaw materials / materials

Acceleration of the global SIS strategy

Action 01

Action 02 China SIS Asia SIS


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Business portfolio

ICt, General products & Realty CompanyWe will draw on our comprehensive capabilities and global network to provide new value and support abundant lifestyles.

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overview

Forest Products & General

Merchandise Division

ICT, Insurance & Logistics Division

Construction, Realty & Financial Business Division

Pulp production (Brazil and Finland)

IT solutions business

Logistics facility development business

natural rubber processing business in Southeast Asia

Mobile phone distribution

Overseas real estate development business

U.K. tyre distribution and retail business

Logistics business

Overseas used-vehicle loan business

Building material business in north America

Insurance business

Domestic credit card business




Percentage of Total Consolidated Total Assets and Total Net Income Attributable to ITOCHU (image)


Overseas: about 40%



March 31, 2014 March 31, 2014


406 (10%)


Japan: 41 (30%)Overseas: 42 (19%)

Forest Products & General MerchandiseTotal Assets (outside): about 50%net Income (inside): about 40%

Construction, Realty & Financial BusinessTotal Assets (outside): about 20%net Income (inside): about 20%

ICT, Insurance & LogisticsTotal Assets (outside): about 30%net Income (inside): about 40%


Launched on April 1, 2012, as the ICT, General Products &

Realty Company, we cover a wide range of business areas,

such as Forest Products & General Merchandise, ICT,

Insurance & Logistics, and Construction, Realty & Financial

Business.

now in the third year since our inception, during fi scal

2015—the fi nal year of “Brand-new Deal 2014”—we will

continue with the growth strategies for existing projects that

we have formulated for each of our business areas. We will

also focus on achieving steady growth by reinforcing projects

that are under way. We will promote proactive asset replace-

ment by seizing the moment in investing in new projects

following careful scrutiny and screening, expanding our earn-

ings platform further in each area.

As our company is involved in wide-ranging business

areas, we will step up collaboration between different busi-

ness areas and enhance global networks that we have pur-

sued since the company’s formation. In this manner, we aim

to create new value that will support abundant lifestyles.

By implementing these measures steadily, we are

endeavoring to create “new and true value” by coordinating

and integrating our human resources and organizations pos-

sessing specialist strength, as we endeavor to increase earn-

ings as a company in the non-resource sector.

Trading income in the ICT, General Products & Realty Company

came to ¥62.9 billion, up 17.4% from the previous fi scal year.

This solid performance stemmed from favorable pulp transac-

tions and robust performance by housing materials-related

companies, increased business by mobile phone-related


In each fi eld of operations, we are constructing robust earnings platforms and striving to increase earnings by forging stronger links between businesses.




Trading income ¥ 32.6 ¥ 42.3 ¥ 55.8 ¥ 53.6 ¥ 62.9

Equity in earnings (losses) of associated companies (7.9) 3.9 17.4 24.5 36.0


Total assets 1,078.4 1,053.7 1,188.7 1,363.4 1,581.7

ROA (%) 0.6 0.6 3.4 4.1 5.2



ITOCHU Kenzai Corp. ¥0.2 ¥0.0 ¥ 1.8 ¥1.5 ¥3.0

ITOCHU FIBRE LIMITED — — — 2.4 6.5

European Tyre Enterprise Limited — — (0.4) 2.2 5.1

ITOCHU Techno-Solutions Corporation 6.8 6.3 7.5 8.9 8.1

COnEXIO Corporation* 1.6 1.4 1.5 4.2 5.4

ITOCHU LOGISTICS CORP. 2.0 0.7 1.3 1.2 1.4

ITOCHU Property Development, Ltd. 0.5 1.7 2.6 1.8 2.2

* On October 1, 2013, the name of ITC nETWORKS CORPORATIOn was changed to COnEXIO Corporation.


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President, ICT, General Products & Realty Company

tomofumi Yoshida

companies, and the contribution of real estate transactions,

as well as to the effect of yen depreciation. net income

attributable to ITOCHU jumped 46.5%, to ¥76.3 billion, due to

higher trading income and increases in gain on investments–

net and equity in earnings of associated companies.

Organization

ICT, General Products Forest Products & General Merchandise Division& Realty Company ICT, Insurance & Logistics Division

Construction, Realty & Financial Business Division CFO Planning & Administration Department


In Forest Products & General Merchandise, the volume of

pulp market transactions is moving upward, particularly in

emerging countries, and this trend is forecast to continue.

Market prices on tyres in the United Kingdom show signs of

bottoming out, leading to expectations of a future recovery.

Meanwhile, we are monitoring changes in Japanese and

U.S. housing market conditions and market prices on com-

modity products such as pulp and natural rubber, which

affect the company’s operating performance.

In ICT, Insurance & Logistics, we see opportunities for

business expansion in the growing demand for ICT services

in Asia, the Middle East, and Africa. new business opportu-

nities are also inherent in big data, smart communities, and

wearable computing.

As the ICT, General Products & Realty Company is involved

in a broad range of areas, our fi rst approach is to add and

augment the specialist strengths in each division and sector,

while at the same time building a robust earnings platform

spanning all organizations. For instance, in Forest Products

& General Merchandise we are a leader in the business of

distributing domestic and overseas construction products.

next, to expand earnings we are adopting a holistically

cooperative approach that transcends individual depart-

ments and sectors. Looking at construction, for example, we

are introducing Internet services developed in our ICT busi-

ness into condominium projects we have developed in our

construction business, thereby increasing the level of service

to customers and augmenting operations within the Group.

These moves aim to create “new and true value” that

supports affl uent lifestyles in the sense that they involve new

transactions generated by pursuing additional and overlap-

ping earnings.

Contribution to concerns for the environment and

creation of enriched communities

Developing businesses in diverse domains, the ICT, General

Products & Realty Company has adopted the mission of

contribution to establishment of safe and rewarding lifestyles.

It does so through the provision of products and solutions

that are closely intertwined with people’s lives and adapted

to societal needs. We also pursue the stable procurement

and effi cient use of forest resources in sustainable ways and

are working to build a more recycling-oriented society.

CSR Initiatives through Our Business ActivitiesSustainable Supply of Forest Resources through CEnIBRA of Brazil


Boost profi tability from stable supply of high-quality hardwood pulp

CO2 fi xation and ecosystem maintenance through sustainable forest management

IT-Based Energy Management Business (ecoFORTE)


Expand businesses through provision of comprehensive services, from facility to operational improvements

CO2 reduction through the promotion of effi cient energy use

Firm position as a leading pulp trader through invest-

ments in world-leading hardwood and softwood pulp

producers

Ownership of the industry-leading tyre wholesaling and

retailing business in the United Kingdom, as well as the

management expertise accumulated through this

business

Comprehensive capabilities for combining functions

across broad-ranging business domains in the ICT sector,

from Internet business to mobile distribution

Top-class global logistics and insurance network centered

on Asia within Japanese companies

Through collaboration with Japan’s largest residential

J-REIT, Advance Residence Investment Corporation, abil-

ity to develop and supply excellent housing, and proven

track record in large-scale logistics facilities

Retail fi nancing expertise developed through years of

domestic and overseas experience

For details on CSR activities at the ICT, General Products & Realty Company, please visit our website.

http://www.itochu.co.jp/en/csr/activities/general/

Growth opportunities and Risks for the ICt, General products & Realty Company


Medium- to long-term Growth Strategies CSR at the ICt, General products & Realty Company

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We see major business opportunities in Construction,

Realty & Financial Business. In the construction sector, for

instance, we expect the Japanese real estate securitization

market to remain healthy for the foreseeable future, with par-

ticularly robust demand for large-scale logistics facilities.

Japan’s largest residential real estate investment trust,

Advance Residence Investment Corporation, is also enjoying

a growth trend. In the fi nancial sector, Asia’s middle class is

expanding in line with rapid economic growth. To meet the

growing investment needs this segment represents, we will

continue to focus on retail fi nancing (small loans to

individuals).


Consumer Finance Business Initiatives targeting non-Japanese Individuals

In the fi nancial sector, we are developing the consumer

fi nance business targeting individuals overseas, designed in

particular to meet individual funding needs in countries exhibit-

ing rapid economic growth. Through United Asia Finance

Limited, we have steadily enhanced our customer base

and earnings platform in Hong Kong since the mid-1990s.

Leveraging this expertise, since 2007 we have been develop-

ing a personal loan business in mainland China, and business

has continued to grow rapidly.

Meanwhile in Thailand, which continues to enjoy eco-

nomic growth, Easy Buy Public Co., Ltd., has kept pace with

the country’s economic expansion, offering fi nancial products

in line with consumer needs and in the process emerging as a

leading company in this sector. In addition, First Response

Finance Ltd., which provides loans on used vehicles in the

United Kingdom, uses an extremely sophisticated customer

management system and specializes in providing credit and

service to match individual customers’ circumstances. Over

the past seven years, First Response Finance has grown its

customer base and seen profi ts increase.

In addition to enhancing existing businesses, we will seek

to take advantage of expertise we have cultivated in the area

of personal loans in Japan and overseas, to develop our busi-

ness further and boost consolidated earnings.

Asian It Service Business Initiatives

In Southeast Asia, which is undergoing rapid economic devel-

opment, we are maintaining a close focus on the ICT busi-

ness, an area of particularly robust growth.

In March 2013, we joined our subsidiary, ITOCHU Techno-

Solutions Corporation (CTC), in acquiring a 100% stake in

CSC ESI Sdn Bhd of Malaysia and CSC Automated Pte. Ltd.

of Singapore, which are affi liated with Computer Science

Corporation, a major IT service provider in the United States.

(The two companies are now known as “CTC Global.”)

Investing in two of the region’s leading IT service providers

in terms of scale should enable CTC to expand its competitive

business in the telecommunications fi eld. By transferring

leading-edge expertise, we also seek to generate synergies

through new service development and pursue a host of

initiatives aimed at business expansion.

We continue to enhance the IT service business and focus

on supporting Japanese and non-Japanese companies that

are entering into or augmenting their businesses in Asia.

CTC Global establishment ceremony (Malaysia)

CTC Global offi ce (Malaysia)

Customers and consumers


Creating “new value” and continuing

to provide “true value”

Pursuing synergies by integrating diverse functions

Employees of First Response Finance, which continues to grow

Easy Buy shop in Bangkok


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Action

01Action

02

Forest Products & General Merchandise

ICT, Insurance & LogisticsConstruction, Realty &

Financial Business

Value chains to deliver abundant “living life”

Action 01

Action 02

Sup

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Annual Report 2014 · Bramhope Group Holdings Ltd.) Expanding Business Activities in Japan (JOI’X...

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